1994 (10) TMI 178 - AT - Central Excise

Summary

Issues:
Modvat Credit on inputs used for Sand Moulds - Whether permissible?
Interpretation of Rule 57A Excluding Clause.
Comparison of decisions by different Regional Benches.
Definition of 'intermediate goods' under Rule 57D.

Analysis:
The judgment revolves around the issue of Modvat Credit on inputs used for Sand Moulds by a company manufacturing Steel Castings. The appellant claimed Modvat Credit on various inputs including Sodium Silicate, Acetylene, Dextrine, Grinding Wheels, and others. The lower Appellate Authority disallowed the credit on the grounds that these inputs were not used in or in relation to the finished products but only in the manufacture of Moulds.

The appellant argued that inputs used for Sand Moulds are an essential part of the manufacturing process of Steel Castings, making them eligible for Modvat Credit. Reference was made to a previous Tribunal case involving Hindustan Motors Ltd., where a similar issue was decided in favor of the company. The appellant sought a similar treatment based on the precedent set by the Hindustan Motors case.

The Senior Departmental Representative contended that a question of law had been referred to the Calcutta High Court, suggesting the matter be kept in abeyance until a decision was reached. He highlighted decisions by West and South Regional Benches favoring the Revenue on similar issues. However, the judgment noted that the Madras High Court had overruled the decisions of these Regional Benches in a separate case, emphasizing the interpretation of 'intermediate products' under Rule 57D.

The Tribunal, after detailed analysis, concluded that inputs used in the manufacture of Sand Moulds should be considered as 'intermediate goods' in the context of Modvat Credit eligibility. The judgment emphasized a broad interpretation of 'intermediate goods' to encompass all products arising in the manufacturing process between raw inputs and final products. The Tribunal disagreed with the Department's narrow interpretation and allowed the appeals in favor of the appellant company.

The judgment highlighted the importance of considering the entire manufacturing process and the role of various inputs in the production chain. It also referenced definitions of 'intermediate' from chemical dictionaries to support the interpretation adopted. Ultimately, the Tribunal's decision aligned with the broader understanding of 'intermediate goods' and granted Modvat Credit to the appellant company for inputs used in Sand Moulds, setting aside the lower Appellate Authority's disallowance.